MEDIA RELEASE: Australians would all be poorer with Albanese’s tax increases

30 October 2015

Anthony Albanese ignores the facts when he argues Australians should be paying more tax, according to Michael Potter, an economist from the Centre for Independent Studies.

“Mr Albanese argues there were too many tax cuts under the Howard government. But this flies in the face of the fact that tax levels were at record highs under the Howard administration. He is also arguing that all Australian households should be made poorer,” Mr Potter says.

“As a result, the Leader of the Opposition should repudiate Mr Albanese’s comments immediately.

“In the 2000s, the ALP recognised that tax levels were at record highs. Here is the then Shadow Treasurer, Bob McMullan at a Press Club Speech in 2002:

This is the highest taxing government in Australian history. Taxpayers are paying more in income tax today than they were before the tax cuts two years ago that were meant to compensate for the GST.

“The ALP were right at the time and nothing has changed since then. Based on data from the Parliamentary Budget Office, the federal government’s tax to GDP hit a record level of 24.15% in 2000-01, but this record was broken — the tax to GDP ratio hit an all-time high of 24.21% in 2004-05,” Mr Potter said.

“Yet Mr Albanese thinks that Howard’s tax levels were too low. He should state exactly which (record high) taxes should have been higher.

“It is likely that Mr Albanese is arguing that too many personal tax cuts were given under the Howard Government, and some of these cuts should have been cancelled. Which ones? How much extra in tax is Mr Albanese arguing we should have paid? What is the hit to family budgets that Albanese supports?

“For example, is Mr Albanese arguing that the (then Opposition Leader) Kevin Rudd should have opposed the tax cuts offered by Howard in the 2007 election campaign? This probably would have been a political disaster.

“In truth, Mr Albanese’s case is extremely flimsy. Tax cuts are not ‘spending’ as he argues. Governments don’t ‘spend’ money on tax cuts – instead they are reducing the amount they take from household budgets.

“Mr Albanese argues that instead of reducing taxes, governments should have spent more on infrastructure. While infrastructure investment is beneficial, there are no indications that governments take these decisions better than the private sector. Australia really didn’t need more public investment in pink batts, which worked so well under the government Mr Albanese was part of.

“Higher taxes would also have hit Australia’s economy hard — taxes were at record levels in the 2000s and hardly needed to be higher.

“And finally, Mr Albanese fails to acknowledge the impact higher taxes would have on family budgets. It is his suggestion of higher taxes that would have made all Australians poorer,” Mr Potter concluded.

Michael Potter is a Research Fellow at the Centre for Independent Studies